If theres a semblance of turf already there, why not just slit-seed into it? Why go through the hassle of tilling and raking, then having to worry about wash-out?

We've got a slit-seeder for sale, if you are interested....

The only reason I can see for tilling and re-seeding would be if the grade is completely wrong, and that is what led to the lawn being scalped in the first place.

$.35/sq ft sounds high, but for that small of a job, if I were to till it, rake it, re-seed and everything else, I would have to charge about that amount. You need to have a minimum price, or you won't make any money. The only exception would be if you had several of these to do on the same street, all next door to each other....